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How to measure design ROI

News, 06 November 2015

LONDON: From product packaging to corporate identity, design is an important factor in business success and its impact needs to be quantified in order to give it the standing it warrants, a leading industry figure has argued.

Writing in the current issue of Admap, Joanna Seddon, president of brand consulting practice OgilvyRED, says that, despite the example of Apple, all too often design is regarded as an unnecessary cost and its impact is only recognised, if at all, after the fact.

"Only when its contribution to business growth is proven, will design get treated with the seriousness it deserves," she writes. "And only then, will it become possible to get the investment required to take full advantage of the potential of design to create financial value."

Accordingly she lays out a framework for measuring ROI from investment in design, linking it to business financials to show it drives sales and profit growth.

"The secret to measuring the value created by design is to determine how effective design is in creating preference and exactly what role it plays in driving purchase," Seddon maintains.

"This requires a piece of market research, which isolates design from other factors to identify its impact on consumer behaviour."

And once that has been established, it can be translated into money terms. So, for example, if 20% of the purchase decision can reasonably be attributed to design, then 20% of cash flows are design related.

This figure can then be applied to future cash flows, while applying a discount rate gives the value of design-driven cash flows.

This framework, Seddon suggests, can also identify gaps in design effectiveness compared to competitors and allow marketers to run scenarios to quantify the additional value that would be created from a new or updated design.

In this way, the role of design can no longer be regarded as an indulgence, and designers can be elevated into a role as senior marketing decision-makers.

Seddon further argues that the quality of design will improve and that companies will be prepared to adopt bold designs that can change the direction of their business.

Data sourced from Admap